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Running Head: ANALYSIS OF FINANCIAL STATEMENTS1Analysis of Financial Statements for AmazonTamara N RobinsonSouthern New Hampshire University
ANALYSIS OF FINANCIAL STATEMENTS2AbstractAmazon is a Fortune 500 e-commerce company based in Seattle, Washington. It has thedistinction of being one of the first large companies to sell goods over the Internet. In 1994,JeffBezos founded Amazon, whichlaunched the following year. This paper will conduct a financialanalysis of Amazon’s financial statements from 2013-2016. Financial analysis is used toestablish the investment value of a business, stock or other asset. Income, balance, and cash flowstatements are typically used to extract ratios that divulge information such as solvency, price toearnings and return on equity. Their function is to paint a current picture of the asset that can thenbe compared to similar businesses or predict future performance based on past performance. Thefinancial analysis will review the changes in financial ratios,analyze the changes in the financialreports regarding cash, analyze the changes in the financial reports regarding the accountbalance, describe the type of valuation method, as well as predict how your company willperform in the following year compared to competitors.Keywords:financial statements, financial analysis, Amazon
ANALYSIS OF FINANCIAL STATEMENTS3Financial RatioThe current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations. To gauge this ability, the current ratio considers the current total assets of acompany relative to that company's current total liabilities (“Current Ratio,” n.d.).The currentratio for Amazon for 2013-2016 are 1.07, 1.12, 1.05, and 1.04, respectively. A ratio below 1means that a company has more liabilities than assets which makes it more difficult to payobligations. Meanwhile a ratio above 1 means a company can pay its obligations due to thecompany having more assets than liabilities.The gross margin ratio is computed by dividing the company's gross profit dollars by its net salesdollars.A company should be continuously monitoring its gross margin ratio to be certain itwillresult in agross profit that will be sufficient to cover its selling and administrative expenses(Averkamp, n.d.).The quick ratio for Amazon for 2013-2016 is 75%, 82%, 75%, and 78%,respectively.Thegross marginrepresents the percent of total sales revenue that the company

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Term
Winter
Professor
DL
Tags
Generally Accepted Accounting Principles